Wherever you look, travel money is full of gotchas. You will pay through the nose, be it on a poor exchange rate or charges.

Deciding how to convert your hard-earned cash into foreign currency is a matter of picking the best of a bad bunch.

Your main choices are:

* Carrying cash;

* Using a debit card to spend or withdraw cash;

* Spending on a credit card or using one for cash advances*;

* Using pre-paid travel cards.

Sometimes I think it's easiest to do the foreign exchange transfer at the airport and take a wodge of cash with me. This certainly isn't the safest way. Carrying a lot of cash is risky - especially in poorer countries where theft or robbery may be more likely.

Eftpos and credit cards are handy. They can be expensive to use, thanks to ATM withdrawal fees and offshore service margins - a percentage added by the bank to every overseas transaction.

Travellers are increasingly using pre-paid travel cards. The main ones are:

Travel cards have some advantages over other plastic. One is the ability to convert your New Zealand dollars into foreign currency before you leave, locking in the exchange rate. You can play the forex markets transferring your money when rates are more favourable.

Another useful feature is that you can usually load several currencies on to the same card and spend from different currency wallets. It is also safer because the travel card is not linked online to your other accounts.

Another advantage over Eftpos or credit cards is that some travel cards don't charge you for ATM withdrawals in other countries.

What's more, if you're spending the currency that you have loaded on to the card you won't usually be charged offshore margins.

Beware, however - this isn't a blanket rule. Westpac adds a 2.5 per cent margin to all overseas purchases made with its Prepaid Travel Card. And with the Cash Passport a purchase or ATM withdrawal made in a currency not loaded on the card attracts a 5.95 per cent foreign exchange margin.

The charges do make it difficult to compare the cost of travel cards. Each person will use his or her cards differently. One may make ATM withdrawals and another use them only to buy goods and services.

The first thing to consider with costs is the initial charge to set up the card. With cards such as Westpac's, you may need to get a new card every few years, which adds to the cost.

The next ker-ching! moment is when you load cash on to your card.

Some charge you to load cash on to your travel card. Others don't.

Then you need to check if there are charges for withdrawing from foreign ATMs. OneSmart and Cash Passport don't charge. Kiwibank charges $6 for withdrawals from foreign ATMs.

Westpac charges $8 a withdrawal, but waives it at ATMs belonging to Global Alliance banks.

MasterCard New Zealand manager Albert Naffer says even if the card operator doesn't charge ATM fees, the bank that owns the machine can.

Another issue to consider is the exchange rate offered by the card and any commissions or fees. I checked Loaded for Travel's rate on Tuesday and NZ$1000 bought A$787.20 if the transaction was done on a Loaded for Travel card.

This was nearly $2 better than Kiwibank's rate for cash.

Interestingly, at BNZ, ASB and other banks offering the Cash Passport, the exchange rate offered for the travel card is not as good as the rates for cash displayed at the banks.

Likewise, the travel cards that boast of no commission don't necessarily offer a better deal. My NZ$1000 would have bought me $775.66 on a OneSmart card, nearly $12 less than I would have got at Kiwibank. But the latter would have charged $10 commission, wiping out that advantage.

Both were better than Travelex. Its Auckland Airport branch said my NZ$1000 would have bought $770 Australian dollars on the same day.

Staff at ASB and BNZ told me when I posed as a customer that I would get the same rate that Travelex offered.

If you'd transferred the same amount of money in cash at a BNZ branch you would have got $787.10.

The number of currencies that can be loaded on to a travel card are increasing. Kiwibank is about to extend available currencies to 12, including Thai baht, Indian rupee and South African rand, which aren't available on competitors' cards.

There are other factors to look at as well as cost. You may want a spare card for your spouse or just to keep in your hotel room if the other goes missing. Most, but not all, offer spare cards at no extra cost. Another issue is how you will get your card replaced if it is stolen.

Some providers charge for this and there can also be quite steep courier charges if you need the new card while you're still overseas.

Naffer says the real differentiator between the cards is the benefits. OneSmart customers accrue air points on eligible purchases and the card can can also be used for contactless check-in for domestic flights. It is also set up for Tap & Go payments, which don't require a PIN for small transactions.

On the other hand, OneSmart charges $1.95 a month in either monthly account or inactivity fees, unless you have deposited $500 in the month.

That "month" is on the anniversary of the day the card was first taken out, which most people don't remember, so it would be easy to get two months' worth of fees over two, three, or four weeks.

OneSmart can be worthwhile if you know a few tricks. One, says Naffer, is to have a zero balance on the card when you're not using it. That way there are no fees. The other is to use your OneSmart card as your regular transactional debit card in New Zealand. Providing you load $500 a month on it, there is no monthly fee. You also pick up air points at FlyBuys retailers and can double-dip by swiping your FlyBuys card as well.

Whichever card you get it's essential to read the schedule of charges and fine print. The Loaded for Travel card has a $1 a month fee if you don't use your card at least once in a consecutive period of 12 months.

The equivalent Cash Passport inactivity fee is $4 monthly after 12 months. You can, of course use the travel card to buy a packet of chewing gum at the local dairy if you're organised.

*Cash advances on credit cards are notoriously expensive. They come with an upfront fee and you are charged full interest on the money from the day of the advance.

Diana Clement is a freelance journalist who writes about personal finance and careers. She has worked as a journalist for more than 25 years in both New Zealand and the UK. Diana has contributed to a large number of local and international publications. Her pet topic is the secrets of saving money.